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Abu Dhabi Exploring Asset Sales After Oil Prices Bite

Abu Dhabi is reviewing its largest state-owned companies as the slump in crude oil pressures the emirate’s finances, four people with knowledge of the matter said.
Abu Dhabi National Energy Co. and International Petroleum Investment Co. are in talks with banks on options including strategic partnerships, share sales and asset disposals, the people said, asking not to be identified because talks are private. Mubadala Development Co., an investment fund, is considering further divestments after selling most of the assets in its joint venture with General Electric Co., according to the people.
Bank of America Corp., JPMorgan Chase & Co. and Credit Suisse Group AG are among banks pitching for mandates, while some government-related entities have already appointed advisers, according to the people. Mubadala, Abu Dhabi National Energy Co., known as Taqa, and IPIC own about $150 billion of assets, according to Bloomberg calculations. The banks declined to comment or weren’t available to comment, as were Taqa and IPIC.
“As a diversified and active investor, we’re always looking for new investment opportunities in challenging times, as well as monetizing assets, in line with our long-term strategic plan,” said Brian Lott, a spokesman for Mubadala.
Abu Dhabi, capital of the United Arab Emirates and source of about 6% of the world’s proven oil reserves, is seeking to counter the erosion of its finances after crude prices halved in the past year. The UAE is OPEC’s third-biggest oil producer and may post a fiscal budget deficit this year for the first time since 2009, according to the International Monetary Fund. Economic growth will probably slow to 3% this year from an estimate of 3.6% in January, the IMF said this month.
“It makes sense that Abu Dhabi’s government-related enterprises would review their asset portfolio, rationalize their spending and as important, diversify further their source of funding away from public money,” said Philippe Dauba-Pantanacce, senior Middle East, North Africa and Turkey economist at Standard Chartered Plc in London. “There is a re-assessment of public spending across the board in Abu Dhabi, amid the current oil price levels.”